VAT in tourism grows from 13 to 25 percent?
While tourism experts in Bol on Brač, as part of the Croatian Tourism Day, are discussing the future and further development of our tourism, the Government presented at today’s session a tax reform that according to current information plans to raise VAT in tourism from the current 13 percent to 25 percent! At the presentation of the tax reform today, Minister of Finance Marić pointed out that the proposal that from January 1, 2018, there should be only two VAT rates, 12 percent lower and 24 percent lower.Are we cutting the only branch we are sitting on? It should not be forgotten that the tourism sector has been “saving” the state budget from collapse for years and makes up 20 percent of the country’s GDP. Also, the past as well as this tourist season are record in terms of overnight stays and tourist arrivals, as well as in terms of income, and this year the income from tourism is expected to be over a record eight billion euros. If we want the Croatian tourism industry to be more internationally competitive, it certainly cannot with the highest VAT rate in Europe, and thus cannot attract new investments in tourism.We will find out soon how the new Minister of Tourism Gary Capelli will react to this news, but one thing is for sure, the tourism sector will certainly not be thrilled with the VAT increase as the reduction of VAT to 5% has been encouraged and discussed for years. to others in the international market, not about increasing.With 13 percent for accommodation and 25 percent for tourism services, Croatia has the highest VAT for tourist services in the entire competitive Mediterranean. The VAT rate on accommodation in the Mediterranean is the highest in Croatia with the current 13%, followed by France 10%, Italy 10%, Spain 10%, Slovenia 9,5%, Bulgaria, 9%, Cyprus 9%, Greece 6,5 , 6% and Portugal with only XNUMX%.Tax reform with the planned two VAT rates, lower 12 and general 24 percent would increase the price of products that have so far been in a special reduced tax category of 5% VAT such as bread, milk, books, textbooks, medicines, medical equipment and supplies, as well as cinema tickets and daily newspapers. We wonder how much prices will rise on islands where prices are still higher due to the cost of transport. Also, it raises the question of the quality of life in the already deserted cities and islands on the Adriatic outside the tourist season. And if there are no people, there is neither life nor tourism. Also, one of the novelties of the tax reform is that the single general income tax rate is reduced from 20 to 18 percent, while the income tax rate for farmers and craftsmen with incomes of less than three million kuna per year would be 12 percent. It was also announced that the tax for holiday homes and the tax on the company will be abolished from 01.01.2017.Tax reform is going to a public debate as well as a vote in Parliament. Again, it is all up to us to fight and give our opinion in an argumentative way.